Quarterly report pursuant to Section 13 or 15(d)

SHAREHOLDERS' EQUITY

v2.4.0.6
SHAREHOLDERS' EQUITY
 3 Months Ended
Mar. 31, 2013
SHAREHOLDERS' EQUITY [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 12 – SHAREHOLDERS' EQUITY
 
Regulatory Capital
 
The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five categories, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is only adequately capitalized, regulatory approval is required to, among other things, accept, renew or roll-over brokered deposits. If a bank is undercapitalized, capital distributions and growth and expansion are limited, and plans for capital restoration are required.
 
At March 31, 2013 and December 31, 2012, actual capital levels and minimum required levels were (in thousands):
 
Actual
 
 
Minimum Required
For Capital
Adequacy Purposes
 
 
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
 
 
Minimum Required Under MOU
 
 
 
Amount
 
 
Ratio
 
 
Amount
 
 
Ratio
 
 
Amount
 
 
Ratio
 
 
Amount
 
 
Ratio
 
March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
172,361
 
 
 
15.4
%
 
$
89,830
 
 
 
8.0
%
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
168,273
 
 
 
15.0
 
 
 
89,889
 
 
 
8.0
 
 
$
112,361
 
 
 
10.0
%
 
N/A
 
 
 
N/A
Tier 1 capital (to risk weighted assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
155,640
 
 
 
13.9
 
 
 
45,122
 
 
 
4.0
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
154,091
 
 
 
13.7
 
 
 
44,944
 
 
 
4.0
 
 
 
67,417
 
 
 
6.0
 
 
 
N/A
 
 
 
N/A
 
Tier 1 capital (to average assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
155,640
 
 
 
10.5
 
 
 
59,599
 
 
 
4.0
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
154,091
 
 
 
10.4
 
 
 
59,564
 
 
 
4.0
 
 
 
74,454
 
 
 
5.0
 
 
 $
119,127
 
 
 
8.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
168,929
 
 
 
15.0
%
 
$
90,244
 
 
 
8.0
%
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
164,214
 
 
 
14.5
 
 
 
90,299
 
 
 
8.0
 
 
$
112,874
 
 
 
10.0
%
 
N/A
 
 
 
N/A
Tier 1 capital (to risk weighted assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
150,857
 
 
 
13.4
 
 
 
45,122
 
 
 
4.0
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
149,960
 
 
 
13.3
 
 
 
45,150
 
 
 
4.0
 
 
 
67,724
 
 
 
6.0
 
 
 
N/A
 
 
 
N/A
 
Tier 1 capital (to average assets)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
 
150,857
 
 
 
10.4
 
 
 
58,312
 
 
 
4.0
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
 
 
N/A
 
Bank
 
 
149,960
 
 
 
10.3
 
 
 
58,371
 
 
 
4.0
 
 
 
72,964
 
 
 
5.0
 
 
$
116,742
 
 
 
8.0
%
 
Approximately $38.9 million and $37.7 million of trust preferred securities outstanding at March 31, 2013 and December 31, 2012, respectively, qualified as Tier 1 capital. Refer to our 2012 Form 10-K for more information on the trust preferred securities.
 
The Bank was categorized as "well capitalized" at March 31, 2013 and December 31, 2012.

In connection with the October 26, 2012 termination of the Company's Written Agreement with the Federal Reserve Bank of Chicago, the Board of Directors adopted a resolution requiring the Company to obtain written approval from the FRB before declaring or paying any dividends, increasing holding company debt, or redeeming any capital stock.  The payment of future cash dividends by the Company is largely dependent upon dividends received from the Bank out of its earnings. The Bank had retained earnings of approximately $6.4 million at March 31, 2013.
 
On April 12, 2013, the FDIC and DIFS, the primary banking regulators of the Bank, notified the Bank that the Bank's MOU with the FDIC and DIFS had served its purpose and was released.  As a result, the Bank is no longer subject to any regulatory order, memorandum of understanding or other similar regulatory directive or proceeding and has returned to a normal regulatory operating environment.  The requirements of the MOU which are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 are no longer applicable to the Bank.  In particular, the enhanced regulatory capital requirements of the MOU no longer apply to the Bank and the Bank is no longer required to obtain the prior written consent of the FDIC and DIFS before the Bank declares or pays dividends.